Are non-fungible payments attractive when they reduce risk exposure? Evidence from Colombia

We conducted a lab-in-the-field experiment in which 214 Colombian rural workers must choose between cash or voucher payment for completing a real effort task. Although the voucher may be perceived as non-fungible, it halves the probability of suffering a negative shock that will reduce the participant’s payment by two-thirds. Participants made four decisions in which we vary the voucher values such that this payment method offers, in expectation, between 88% to 123% of the cash payment (fixed across decisions). We find that uptake rates go from 32% to 56%, from the least to the most generous voucher. These rates are consistently larger compared to a reference sample of undergrad students from the same region (p–values from the χ2 tests for all four decisions fall below 0.035). Our between-subjects variations reveal that presenting the vouchers in descending order yields a higher uptake than the ascending order (p < 0.001 for the corresponding coefficient in a tobit and ordered logit regressions including municipality characteristics, an effect driven by the two decisions with the lowest voucher values, with p–values of 0.008 and 0.072 in the χ2 tests, respectively). We interpret this result as an endowment effect of the voucher’s risk reduction.


General instructions
Welcome.We appreciate that you accepted the invitation to this activity that will last around 60 minutes.This time includes the explanation of the activity, the time in which you make your decisions, and a short survey.In this activity, your decisions have economic consequences to make them more similar to the decisions you make in your daily life.Winnings from this game are not paid for participating, so we hope that you will participate in future activities of other researchers, even if no winnings are involved.
The funds to cover these expenses have been provided by [undisclosed institution] within the framework of a project on labor markets financed by [undisclosed funding source] The information collected will be anonymized and only those responsible for the project will have access to it.

Initial profit for participating
Just for participating, answering a survey and staying until the end you will win $10,000.This money will be given to you [in cash/vouchers, whose redemption at a nearby supermarket will be explained below].
Additionally, you will complete a task that will take between 5 and 10 minutes.You will be able to choose between two payment schemes for carrying out this task.
>>In the treatment with show-up fee paid as a voucher, display the voucher.<<

Pay in cash or vouchers?
We want to understand if you prefer cash or voucher payment.

You can exchange the vouchers after finishing the activity for food or toiletries at the supermarket [NAME OF SUPERMARKET,] which is located [DESCRIPTION IN TIME/DISTANCE ON HOW TO GET THERE].
At the end of the activity we will throw a die that has 4 green faces, 1 red face and 1 white face.
>>Show dice and their respective faces.<<If you receive your winnings in cash, the roll of the dice is the only thing that determines your winnings.If it lands on the red side, it will cause you to lose $20,000 of your winnings.
If you receive your winnings as tokens, you will roll the dice first.If the die lands on the red side, you will be able to flip a coin that works as "insurance".
If the coin lands on the green side, it will prevent you from losing $20,000 of your winnings.In other words, receiving the winnings in vouchers halves your chances of losing that $20,000.The white side of the die has no function.If the white face comes up when rolling the die, the die will be rolled again until a green or red face comes up.Payment in vouchers can only be spent on food or toiletries at the supermarket, but in return you have an "insurance", which reduces the chances that a negative event will reduce your earnings by $20,000.
Since we are interested in how much money in vouchers makes this option interesting to you, we will make the decision to keep cash or vouchers four times.The amount offered as vouchers will change, while the cash payment will be fixed.In the end, we will choose one of four random decisions to calculate your payouts.Now we are going to explain what is the task that you will have to carry out in order to receive the earnings of the activity.

Explanation of the separate bean task
You will receive a bag of beans and two small buckets.You must separate the red grains, which will go into the small bucket, from the white grains, which you will leave in the big bucket.
We will indicate the level until which the small buckets should be filled.You will need to complete this task in order to receive any earnings from the activity.It doesn't matter how long it takes you to complete it, but it's important that you do it as quickly as possible because we won't be able to continue until everyone has finished.We will measure the time it takes you to complete the task, but this will not affect your earnings.
>>Show the buckets and the tape or line to which they are expected to be filled.<<

Explanation of the decision-making process
Now we are going to explain in detail how the decision-making will be.You have received a plastic card with the number 1, this means that with this card you will make the Decision #1.If you choose CASH, you can win $30,000 if one of the 4 green sides of the die comes up, or $10,000 if the red side of the die comes up.If you choose the VOUCHERS, you can win $34,000 if one of the 4 green faces of the dice comes up.If the red side of the die comes up, you have an "insurance" that will allow you to flip the coin.If the coin lands on the green side, you will win $34,000.If the coin lands on the red side, you will win $14,000.After making this decision, you can remove the other three laminated cards from the envelope, as we indicate.

Summary of instructions
This poster summarizes the stages of the activity.First, we are going to read and sign the Informed Consent.This is a document in which you declare that you are here at your will, that you have understood the instructions of the activity, and that you will comply with the biosafety instructions.In exchange, we declare that the data will be used confidentially and for purely academic purposes, and that we will make the promised payments.
Then, we are going to make the four decisions.Remember that they are very similar decisions, except that the amount we offer you in VOUCHERS will change, whereas the amount in CASH will be fixed.Once you make all four decisions, you will do the task of separating coffee beans.
One you take all the decisions and complete the task, you will draw one ball corresponding to the decision number we will pay to you.Once we have the selected decision, we will roll the dice and flip the coin to compute your payment.Finally, while we calculate your earnings and prepare the receipt for you to sign, we will ask you to complete a survey.

Reading and signing the informed consent
>>Ask participants to remove the informed consent form from the envelope.Read the consent aloud and ask them to sign it.Check that all participants signed.<<

Making the first decision
Now that we've signed informed consent, let's quickly review the decision-making process.
>>Ask participants to remove card number 1 from the envelope.Check in each decision that the card outside corresponds to the decision announced out loud.<<You have received a plastic card to make Decision #1.If you choose CASH, you can win $30,000 if one of the 4 green sides of the die comes up, or $10,000 if the red side of the die comes up.If you choose the VOUCHERS, you can win $34,000 if one of the 4 green faces of the dice comes up.If the red side of the die comes up, you have an "insurance" that will allow you to flip the coin.If the coin lands on the green side, you will win $34,000.If the coin lands on the red side, you will win $14,000.
Please use the marker to make an "X" on the option you prefer, CASH or VOUCHERS.Once all the participants keep their marked card in the envelope, we will move on to the second decision.
>>Collect card #1 and fill out the session registration.<<

Making the second to fourth decisions
>>Read again the consequences of choosing cash or voucher.The script for decision making #2 through #4 can be a bit repetitive.It can be shortened if it is considered that the participants understood after the first decision.Pick up the corresponding card and fill out the session registration.<<

Performing the bean separation task
You have already made all four decisions.Now we are going to give you the bag with beans and the two buckets.Please do not start until we tell you to.Remember to separate the red grains, which should go into the small bucket, from the white grains.For this, you will not be able to spread the beans on the table/chair you are on.
You will need to complete the task to receive the earnings from the activity.No matter how long it takes you to complete it, but we won't be able to continue until everyone has finished.We will measure the time it takes you to complete the task, but this will not affect your earnings.

Payment computation: choice selection, dice roll and coin toss
We will now decide which of the four tasks will be used to calculate the earnings for each participant.The monitor will approach you, and you will draw a ball from the bag.Each ball is marked with a number from 1 to 4. The number you roll will correspond to the decision that we will pay you.
After having defined the decision that will be paid, you will roll the dice.If the red side of the die comes up and you chose the CASH payout for that decision, you will lose $20,000 of your payout.If the red side of the die lands and you chose the VOUCHER payout for that decision, you will flip a coin.Only if the coin also lands on the red side will you lose $20,000 of your payout.If the white face lands when the die is rolled, it will be repeated until the roll lands a green or red face.

Survey and final payments
While we finish calculating your earnings, one of the monitors will help you filling a survey.We will ask you for characteristics about yourself, your work and your home.Remember that all information collected within this activity, including your responses to the survey, will be used confidentially and solely for the purposes of this research.

Voucher redemption
You have received the payment for the activity in a voucher.You can redeem it for food or toiletries at the supermarket [NAME OF SUPERMARKET.] Once you have decided how to spend the vouchers, you can approach one of the activity monitors in the supermarket, hand over the vouchers, and claim the desired items.If you want to spend some of the initial money you received for your participation in the store, you can do that too.
Ahora vamos a explicar cuál es la tarea que deberán realizar para poder recibir las ganancias de la actividad.

Resumen de las instrucciones
Este afiche resume las etapas de la actividad.
>>Show the card with Decision #1 .<<(this card is similar to the left panel of Figure ??) >>Show the poster and explain each stage of the activity.<<(the poster corresponds to the right panel of Figure ??) >>Display the voucher in the treatment with show-up fee paid in voucher.<<¿Pago en efectivo o en vales?Queremos entender si usted prefiere un pago en efectivo o en vales.Los vales los podrá intercambiar tras finalizar la actividad por alimentos o artículos de aseo en el supermercado [NOMBRE DEL SUPERMERCADO,] que está ubicado [DESCRIPCI ÓN EN TIEMPO/DISTANCIA SOBRE C ÓMO LLEGAR].

(
the poster corresponds to the right panel of Figure ??)

Table A . 1 :
Participants by municipality in the field sample

Table A . 4 :
Uptake of the voucher option compared to 30 kCOP in cash.

Table A . 5 :
Treatment effects on the price of accepted vouchers

Table A .6: Tobit
model for the field sample with covariates of interest in an exploratory analysis.